City blasts HUD’s funding policy

Sandy victims who rejected SBA loans face grant limits

Kevin Reilly said he cannot elevate his storm-damaged home in the Canals until issues with NY Rising grant funding are resolved.

Kristie Arden/Herald

Kevin and Kristie Reilly’s home was damaged by Hurricane Sandy, and they are hoping that NY Rising grants will help cover the repair costs.

Kristie Arden/Herald

By Alexandra Spychalsky

The City Council is calling on the U.S. Department of Housing and Urban Development to waive a policy that is negatively impacting Hurricane Sandy victims who rejected Small Business Administration loans because they could not afford to take on more debt.

City officials said that victims who are hoping to receive federal Community Development Block Grants through the new state-run Sandy funding program, NY Rising, but opted not to take on SBA loans that they were approved for, are being denied grant assistance.

The program provides homeowners, renters and business owners with grant money to defray repair costs that are not covered by the Federal Emergency Management Agency, the SBA or flood insurance.

City officials, however, said that HUD regulations stipulate that SBA loans for which homeowners are approved are registered even if a homeowner did not accept a loan. The regulations do not take into account the circumstances of cash-strapped homeowners who are in no position to take on more debt, officials said.

If a homeowner applied for an SBA loan and was approved, but opted not to take it, it is still subtracted from the total amount of money he or she is eligible to receive from the grant program.

“Putting Sandy victims in a no-win situation by making them choose between losing access to the resources they need to rebuild their lives by taking on an unsustainable debt load is totally wrong and must be changed,” Council President Scott Mandel said. “This is a grossly unfair policy, and we will continue to fight to ensure Long Beach homeowners get the maximum amount of aid they rightfully deserve.”

The city released a statement last Friday calling on HUD to change the regulation to allow Long Beach residents to receive the much-needed funding they have been counting on since the NY Rising program was announced last month. U.S. Sen. Charles Schumer, who called on HUD Secretary Shuan Donovan to revise the policy, said that HUD is reviewing his request.